Podcast by Denyse Drummond-Dunn
Podcast by Denyse Drummond-Dunn
Is the future of retail in the stars?
With the move of most major supermarket chains to offer online stores too, plus a few successful online only stores, such as Amazon in the US and Ocado in the U.K. manufacturers are now reconsidering just how big they could or should grow their online business.
Today, supermarkets are scrambling to catch up as start-ups in many developed countries are giving this new type of freedom to consumers.
The case for bricks & mortar stores
Customers will always need to see and try before they buy in numerous categories. Offering free returns may work for apparel but not for electronics.
Several home improvement brands and stores are already offering apps which allow customers to see their potential purchases in their homes. Or their paint and fabric choices "in situ" but actually virtually.
The future of retail
I decided to summarise some of the key changes which I believe are essential to answer customers needs already today, not just in the future:
Convenience: customers have busy lives and prefer less and less to go for the large weekly shop in out-of-town shopping malls and hypermarkets. This is why smaller stores in strategic localities will develop faster in developed markets. There will also be a clear differentiation by category.
Experience: while some shopping malls are in decline, especially in the US, those that survive will shift the emphasis from purchasing to experience. By incorporating cinemas, bowling alleys, cafes and restaurants, malls are hoping to attract customers by differentiating themselves and driving more traffic to them.
However, the retailers themselves also need to start selling differently. Apple, Nike and a few others have already done this. But most outlets appear to be oblivious to the change in their customers' desires for experiential connections with brands.
Delivery: Whether we buy online or in-store, one thing is clear; we want it NOW! Fast these days is two-day or same-day delivery. In the near future, we will want our purchase to be waiting for us when we get home. Already a quarter of shoppers, according to some L2 research said they would abandon their cart if same-day delivery was unavailable.
Choice: We all know what is available around the world, thanks to the internet. Our desires are no longer limited by what is available in-store or even in our own country. We want to have the choices that others have, wherever in the world they live.
According to research conducted by Walker, by the year 2020 customer experience will overtake price and product as the key brand differentiator.
Values: Millenials, in particular, are basing their choice of brands on things such as social responsibility, sustainability, transparency and authenticity.
Corporate reputation is being scrutinised and evaluated at each mention in the press or on social media. Organisations that don't walk their talk will be rapidly found out and publically discredited.
Retail has always been about making sure that "the right product is in the right place at the right time at the right price.” The right place at the right time appears to be gaining ground over the other two. What do you think?
A customer-first approach to successful innovation
Whether you believe that 60% of new product launches fail, or the number is 80% or 95%+, the truth is that successful innovation is rare. Why is this? Here are some solutions.
Start with the Category rather than (just) the Customer
Every customer-centric organisation should start their processes with a review of the customers they are looking to please. However, in order to do this, the actual first step to both insight development and successful innovation is to identify the category in which you are, or want to compete.
Another practice I use is to zoom in or out when looking at a category, in order to identify new opportunities.
Your business is or will change - fast - so don't depend on your skills alone
Many industries have been cloned into totally new businesses as a result of technology and new customer priorities.
As just one example of this, Food companies must now adapt to delivering family time, not just ready-made meals. There has therefore been an explosion in meal kits because families want to eat better and even prepare together.
The future of the future
Google has gone from Internet-related products and services to hardware such as Pixel smartphones and Google Home, an Amazon Echo-like device. It has also expanded into energy, AR (augmented reality), VR (virtual reality) and eye-tracking.
Virgin has gone from airlines, media and entertainment, to travel, health and aerospace. Amazon has gone from an online bookstore to the general retail of a vast selection of products.
Facebook started as a social media and networking service. One year ago, its CEO Mark Zuckerberg revealed his ten-year vision, centred around artificial intelligence, global connectivity, VR and AR.
Tesla started in the automotive industry but has since moved into energy storage and residential solar panels. Today it is advancing into underground high-speed transport and space travel.
All these examples show the importance of preparing to adapt to fast innovation change impacting many industries at lightning speed.
Your next steps to future-proofing your innovation
#1. Working with new innovation levers
As already mentioned, most organisations start innovating from their past successes and current skills. While this is certainly quick, it is unlikely to lead to successful innovations. Why not challenge yourself to look at your business from a new perspective?
A personally adapted and developed wheel is a powerful tool to get people to think differently about their brand, category or offer. What all successes have in common is a deep understanding of both their customers and their own brand image.
#2. Zooming out for brands and categories
When you are successful in one category, it can be tempting to extend into others. However, this needs to be done after careful thought. Go too far from the parent brand, as the above examples did and you'll be doomed to failure. Stay too close and you'll not benefit from anything more than a mere renovation.
#3. Zooming into a category niche
It is possible to innovate by zooming in rather than out of the category in which you are in. There are again many examples of this since, in theory at least, it is simpler because you already know the category customers and can segment to appeal more strongly to certain groups of them.
Food manufacturers use this strategy a lot. They often extend into low calorie or low fat, and more recently into gluten-free, OMG-free or lactose-free offerings.
Online marketers depend a lot upon finding the right niche for their product or service offer. They have the advantage over bricks-and-mortar stores of collecting a wealth of personalised information. Together with machine learning, they can quickly develop algorithms to precisely target each person with relevant offers. I don't believe that offline retail will ever catch up, however long they collect data - unless t
What a Customer First Strategy Means for Marketing’s 5Ps
All marketers know their 5Ps, but do you know what a customer first strategy looks like in each of them?
In addition to knowing and describing your target customers in detail, the other tip I give my clients is to start and end every meeting by asking what your customers would think of the decision you are about to make/have just made. This one simple idea is incredibly powerful in identifying actions which are not customer centric.
A customer-centric approach to your customers is both thinking about them in every action you take, as well as knowing them as deeply as you can and keeping this knowledge constantly updated.
This is often seen as the most important “P” for many businesses. In fact, it is usually the one they think about day in and day out. But it’s not the most important in a customer centric organisation.
Think about it. Without knowing the P for people in great detail, you won’t be able to optimise your offer in terms of the other four Ps. That’s why it’s a customer first strategy that works.
A customer-centric approach to product is therefore once again thinking about your customers and involving them in your decision-making whenever possible.
People estimate the value of products and services they purchase, based in part upon its price.
Research shows that customers value a better experience above price.
Retailers like Aldi and Lidl have used their pricing strategies to position themselves against more traditional competitors. In these new super-discounters, consumers accept limited choice for the sake of rock bottom prices..
Consumer goods companies, in particular, have for too long relied primarily on price promotions to meet their sales targets. Amazon has forced pricing down in most other categories because people now check online before buying in many categories.
A customer centric pricing strategy will enable businesses to continue to grow, by understanding how to fix pricing levels more carefully. Knowing the value of what you offer and the importance of brand or service will enable retailers and manufacturers alike to continue to thrive.
The more variants you have the more difficult it usually is to gain a wide distribution. If you know your customers as deeply as you should, then you will be able to identify their differences by region.
Since most retailers provide limited shelf space to each manufacturer, it is best used by showcasing your top selling variants in that area, plus eventual new offers to test their acceptance.
Another “place” that it is important to understand today is social media. Ideally, you should know both where your customers are and when. This P is relatively easy for a brand to be customer centric. You just have to offer what your customers need, where and when they need it.
As with place, knowing what messages your customers are interested in receiving from you and even more importantly where and when are one of the keys to successful communications.
An organisation which makes it difficult for customers to connect using their preferred channel is not customer-centric.
Take a look at your own website contact page. Does it include email, postal and street addresses? Does it have a telephone number or live chat option? It should.
Another related area of promoting your brands is PR. Quickly own up when you’ve made a mistake, rather than trying to hide it. This builds trust and customers will even forgive companies that do this.
A customer-centric organisation provides their customers with valuable information where and when they need it. They also communicate in ways which enhance their relationship and shows they value their business.
What a customer first strategy means today
A customer first strategy is not hard. Just think customer first in everything you do. So how come most businesses get it spectacularly wrong? I think the reason is because they don't see the immediate return.
Reasons for having a customer-first strategy
There has been enough research done to prove that the return on a customer first strategy is significant:
• 86% of buyers will pay more for a better customer experience. But only 1% feel that vendors consistently meet their expectations.
• 89% of consumers have stopped doing business with a company after experiencing poor customer service.
• By 2020, customer experience will overtake price and product as the key brand differentiator.
• 10% increase in customer retention levels result in a 30% increase in value of a company.
Those are numbers that would make any CEO sit up and take notice! But will it make them act?
Marketing are too busy building brands
With so much information available today, marketing is being challenged to demonstrate its ROI. This might explain why they are still putting their efforts into brand building, sometimes to the detriment of their customers, consumers and clients.
An analysis by IBM on UK research by Callcredit Information Group gives a different reason. They found that the majority of marketers is feeling overwhelmed by all this data. Their explanation for this is that "only 29% of marketers believe they have the necessary skills to analyse data, with 44% planning on investing in further training over the next two years to boost confidence within their organisations around the handling of information."
Big data has actually done customer understanding a disfavour. Organisations are hardly increasing their spend on market research. The industry grew 2.2% compared to over 4% for ad spend.
Market research is seen as a cost, not an investment
Companies still need market research to understand their customers. That's why market research needs to provide more "why" answers and not just the mere statistics.
I believe that (a large?) part of the issue is also the researchers themselves. They're not sociable, speak a language others don't understand and seem afraid to voice their own opinion let alone make recommendations.
Customer services are seen as complaint handlers
The customer care centre is often seen as mere complaint handlers. Their image is of a group of women who spend their days on the phone talking to other women!
You only have to take a look at companies which excel at customer care to realise the business benefits of putting the customer first.
Forrester report’s key findings from the 2016 report:
• In all five sectors covered, companies with higher customer experience (CX) scores outperformed rivals in revenue growth
• CX leaders’ annual growth rate is 17% compared to just 3% for others.
• Cable and retail industries beat the field in CX by 24% and 26%, which is a huge boost to the bottom line.
• Even in the sector with the smallest range (airlines), there was a 5% difference between companies.
• This also translated into subscriber growth – in the cable industry leaders grew internet subscribers by 23.9% more than others and video subscribers by 13.9%
Along with the previously mentioned statistics, I can see no reason for a company not to invest in a customer-first strategy.
A customer first strategy needs an organisation to recenter itself behind this company-wide objective. It can make a real difference in terms of both sales & profits to those who follow this direction. But it is essential to have executive support and true commitment from every employee to think customer first.
It will take skill upgrades for both marketing & market research departments to translate the data & information gathered into actionable insights.
And it will mean every employee having the chance to get close up and perso
13 Inspiring marketing quotes
What habits have you become so comfortable with that you don’t even notice or question them? These 13 marketing quotes are amongst my all time favourites.
1. “There may be Customers without Brands, but there are no Brands without Customers.” Anon
Brands depend on customers and if companies remember this, then they can only succeed.
2. “Nothing can add more power to your life than concentrating all your energies on a limited set of targets.” Nido Qubein
One of the biggest mistakes marketing can make is to not appropriately define its target audience.
3. “The more you engage with customers the clearer things become and the easier it is to determine what you should be doing.” John Russell, President, Harley-Davidson
Every employee should have regular customer connections added to their annual objectives. Customer connections inspire new thinking, can identify previously unknown issues and excite everyone to think customer first.
4. “If you use standard research methods you will have the same insights as everyone else.” David Nichols
The methods you use to observe, understand and eventually delight your customers should be moving as fast, if not even faster than the market.
5. “The structure will automatically provide the pattern for the action which follows.” Donald Curtis
Perhaps it is time for your organisation to review its structure and see if it is still optimal for the business of today, as well as of tomorrow.
6. “Customer Service shouldn’t be a department, it should be the entire company.” Tony Hsieh, CEO Zappos
Zappos have an integration program for all new hires that incorporates time at their call centre answering customer queries. What a great way to show a new person what the company is really about.
7. “The real voyage of discovery consists not in seeking new lands but in seeing with new eyes.” Marcel Proust
Instead of forcing your marketing and R&D to meet certain percentage targets of new launches, why not review your current offers with the customers’ eyes?
8. “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” Jeff Bezos
As consumers become interested in knowing and adhering to the policies of the companies behind the brands they buy, it is vital to manage your image from both perspectives.
9. “The journey of a thousand miles must begin with a single step.” Chinese Proverb
Today’s customers often have more complex paths to purchase in many categories than they did in the past, so thinking of the simple awareness to loyalty funnel becomes less relevant.
10. “However beautiful the strategy, you should occasionally look at the results.” Winston Churchill
Review last year’s business results in comparison to the metrics you have been following. Were you correctly assessing the environment, the market and customer behaviour?
11. “The fear of being wrong is the prime inhibitor of the creative process.” Jean Bryant
Do you embrace entrepreneurship in your organisation? What happens when someone fails whilst trying something new? The more accepting you are of relevant trial and error, the more likely it will be that your employees will share their more creative ideas.
12. “Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information.” T S Eliot
Do you ever take decisions based on information alone? If so then perhaps you should reconsider your insight development process. It is only when you have integrated everything you know and understand about them, that you can begin to develop insight.
13. “If you can’t sum up the story in a sentence, you don’t know what you’re talking about.” Garr Reynolds
Taking the decision to share understanding in a new way through storytelling, will have a profound impact on the way your employees thin
Why Customers are the answer to all your problems
How can I innovate more successfully?
According to Harvard Professor Dr Srini Pillay, "Humans have a natural aversion to innovation because it involves a healthy dose of uncertainty and risk."
Unfortunately, we try to reduce this risk by referencing past events to help us to predict the probability of our future success.
This is why the customer is the answer! It is only by getting closer to our customers and remaining curious, that we have any chance of increasing our success in satisfying them.
Therefore, it makes sense that we involve our customers in helping us innovate. Not as a judge of concepts; we know that consumers don't know what they want, at least not until they see it.
However, they do know what their pains are; what is wrong with a product or service and what they would rather have.
Another article in the HBR from McKinsey concludes it takes many skills and cultural changes for most organisations to become more innovative:
Where do I find out what issues my brand has?
The health of your brand and a good estimate of at least its short-term future comes from your work with customers. From brand image and equity to co-creation and observation, your answer is always the customer.
There is an additional bonus in following your brand image and that is that it acts as an early-warning signal. This is because it almost always starts to decline before your sales do!
We tend to continue with the same products and services until something important happens. Important in the eye of the customer that is.
It may be a new brand introduction, a price promotion, bad publicity or negative comments on social media. If these are important enough to customers then they may decide to change brands. And if this impacts a lot of customers, the sales decline can be fast and significant.
Better therefore to follow your image as well as comments on social media.
Social media platforms can provide a wealth of information about your brand. Pew Research ran a useful analysis in their Social Media Update 2016 of the demographic similarities and differences of channels in the US.
Another good source is from Smart Insights. Their "Global social media research summary 2017" which combines information from numerous sources and provides a global perspective.
Observation and listening in person can provide extra benefits that social media can't. The two information sources are thus complementary.
How can I grow my brand more profitably?
As you know there are basically only three ways to grow your business: get more customers to buy, to buy more, or to buy more frequently
You will see that all three ways involve the customer.
A better way to grow more profitably is to understand the value that you offer to your customers. Whether your price is too high or too low, you're leaving money on the table and could be more profitable.
Why is market research not enough to understand my customers?
There are so many reasons why running market research is insufficient to really know and understand your customers and your business. I don't know where to start.
Now don't get me wrong; I'm a big fan of market research. BUT done by experts.
The biggest issue is that understanding takes more information than any single market research project can provide. Yes, it may deliver certain answers to a finite number of questions, but to understand your customer you need to get intimate.
Why are customers the answer?
Here are a few statistics to convince you - and your bosses - of their importance:
• Customer centric organisations are 60% more profitable. (Source)
• The average revenue growth of Customer Experience Leaders is 14% points higher than that of the laggards. (Source)
• 64% of people think that customer experience is more important than price in their choice of brand. (Source)
I don't think anyone can